TNAG-1458-FCO40-1982-Relations-between-Hong-Kong-and-China-1986 — Page 143

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IN CONFIDENCE

SECTION II: UK Export Promotion Strategy

a) Historical reasons underlying the current strategy, and the division

between trade policy and trade promotion work.

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The historical background to current UK trade policy and export promotion strategy

as described in Section IIb iii is that UK-China political relationships are the best they have ever been and that China is embarking a long-term growth plan offering unprecedented long term opportunities. UK investment in China

is low.

b) Assessment of the effectiveness of the current strategy

i) UK strengths in the market

UK industrial strength in China's priority sectors.

Good political relations.

£300 million development loans.

Willingness to discuss technology transfer.

ii) UK weaknesses in the market

Chinese buyers often say UK prices uncompetitive.

UK companies less aggressive

than competitors: China unaware of UK products any UK companies poorly informed about the China market.

iii) Current UK export promotion strategy, and likely outcome for UK exports Current UK trade policy and export promotion strategy is aimed at building on our strengths and overcoming our weaknesses by:

(a) allocating to China more than a proportionate share (measured in terms of our exports) of BOTB manpower and budgetary resources;

(b) re-opening the Consulate-General in Shanghai in 1985, and some strengthening of the ccommercial staffing at Peking and the China Trade Unit, Hong Kong;

(c) continuing high level of 2-way Ministerial visits;

(d) willingness to consider ATP grant-credit mix for some projects, in addition to the £300 million loan facility but insisting that most business has to be

on normal commercial terms;

(e)

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willingness to consider reasonable Chinese requests for relaxations in quota restrictions where these can be granted without unacceptable damage to UK industry;

(f)

a positive attitude

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the the extent consistent with UK strategic interests in discussions about relaxation of COCOM restrictions and in our processing of individual export licence applications.

Assuming that China achieves its foreign trade growth target of around 7% a year, UK exports could be expected to grow at about the same rate, or a little more or less depending on whether our market share improves or declines. But these could be sharp variations from year to year influenced by success or failure in winning individual large contracts.